Congress included a provision in the Medicare program that would pay hospitals based on the size and quality of their care. As part of this program, hospitals could receive additional payment for treating Medicare recipients. The Medicare and Medicaid programs both began with efforts to increase access and affordability through an extensive system of payment and billing systems, as well as a series of other efforts aimed at making health services more widely available and affordable. DRGs were defined as those in which the physician's diagnostic or therapeutic opinion is more closely based on the person's needs than on the clinical symptoms, history, and laboratory test results. DRGs included a broad cross section of conditions and are therefore more costly than a single diagnosis or set of clinical tests in isolation. By 1984, the total expenditures for acute care had risen by more than$500 million and the proportion of costs attributable to hospital costs was rising fast. In 1985, Congress and the White House both proposed additional funding of the entire$300 million cost-containment effort through Medicare. In addition, there was a broad increase in Medicaid funding.
With this increase in federal funding, private providers offered a wide range of cost-containment strategies; many of the most aggressive were not available to the public sector and would have been difficult or impossible to implement on an ad hoc basis. In 1986, Congress expanded the program and also required all hospitals to accept uninsured patients. The public and private sectors, and the Centers for Disease Control, were also engaged in a wide variety of other cost-containment efforts. In 1986, the Centers for Disease Control and Prevention also established the National Center for Health Statistics to provide national, regional, and state health statistics to help the public and government health officials in planning, evaluating, and implementing programs for health care and other social service use. In 1985, Congress enacted Medicare Advantage, an insurance plan that provides payment to certain physicians, hospitals, and other health-care providers by Medicare payments. Public health, particularly health care costs, are an important component of the federal budget as the government pays for the medical expenses of the uninsured, Medicare recipients, and other eligible persons. For the government, the health care burden is particularly substantial because of the relatively young age and relative immaturity of the population.
In the mid-1970s, it was obvious that the government was going to have to reduce costs if it wanted to reduce health care expenditures and the number of people on Medicaid. This was recognized in 1985, when the federal budget for fiscal year 1984 increased by$8 billion over the previous year. For most Americans, the cost of health care is a primary concern. A number of federal programs, state programs, and the Medicare program have contributed to the rise in health-care costs. For decades the DRGs had been defined as those patients who had been seen by a primary care physician, who were classified into two groups according to how frequently these persons had been diagnosed with certain chronic problems.
After 1983, the diagnosis-related group of patients was to be known as the diagnostic group. By the mid-1980s, this verapamil hcl er accounted for a much higher proportion of hospitalizations than either of the existing categories did. The total number of days per patient within each DRG is also reported. Thus, the total number of days a patient was seen by a particular physician at the end of the 12-month period can be determined by dividing the DRG A by DRG B, as well as the days per month and the number of months in the past. In many ways, the DRG A method, with its reporting of the number of days seen by each physician, is similar to the current cost-containment program in Medicare. DRG A is defined by its reporting of the number of days a patient was seen in the DRG, and the number of days per month and number of months in the past in which that patient has been seen by that physician. As noted, the primary care physician had traditionally billed a fixed fee for an annual visit that included the diagnostic services provided by their staff: the first, primary care, visit would be free to patients. This arrangement had several advantages.
First, it was the patient's choice, as it had historically been in the private sector, and it encouraged patients to go to the same physician at the same time. Second, a physician's verapamil hcl er had been a fixed fee for patients with a primary care physician in the past, and this practice had been very costly. The fixed fee also had the advantage that it did not vary with the type or complexity of a patient's health problem, making it less difficult for physicians to set a fee on the basis of the type of service being provided. Third, the fixed fee had the advantage that it helped to reduce physician turnover, since a patient with no chronic problems, for example, might need more visits in a year than a patient with a variety of symptoms. In contrast, for patients with chronic conditions, which are often complicated in nature, the costs of treating them could vary by the number of visits required to treat them. Thus, the fixed-fee model was often difficult to justify, as it was difficult for a physician to set a fee of any length if a patient with no chronic problems had no reason not to see a primary care physician. As such, the advent of a new model of reimbursement, which was similar to the Medicare program, provided a way for both the doctor and the patient to set and pay their own fees. It was the primary incentive for hospitals to offer higher payment rates for certain kinds of illness.